Partial Work Ability and Career Opportunities
Long-term illness or other disabilty prevents many from returning to work or entering the labour force in the first place. Nearly one in four, or 600,000 persons, of working age are affected.
The government key project Career opportunities for people with partial work ability seeks to solve this problem.
“Partial work ability is often passing, but as the population ages, the problem will persist,” says Project Manager Päivi Mattila-Wiro of the Ministry of Social Affairs and Health. Rising retirement ages will also contribute to the problem.
Many young people suffer from depression and retire on a disability pension at a young age. “This may cost society up to 0.5 million euros in just social security expenses and loss of taxes,” Mattila-Wiro states. “For the affected individual and their near relatives, the effects cannot be measured with a price tag.”
The government key project aims to improve the service chains for people with partial work ability. Trained work ability coordinators help them find their way back to the labour market.
Questionnaire surveys show that employers have taken a positive attitude towards employing people with partial work ability. “Employers look more at an applicants’ attitude and skills, not their formal work ability,” Mattila-Wiro explains. As a result, the employment rate among those drawing a partial disability pension has risen to 75 per cent (target level for overall population: 72%).
People with partial work ability have found work in nearly all fields of business, including healthcare, accommodation services and trade. Private sector employers are more prone than public sector employers to hire people with reduced work ability.
Unemployment wrecks retirement plans
The intended retirement age correlates fairly well with the actual retirement age of over 50-year-old wage earners. This is evident in a study conducted by Satu Nivalainen and Noora Järnefelt of the Finnish Centre for Pensions.
Unemployment multiplies the risk of early retirement, particularly for women. “Wage earners who have been unemployed after they turn 50 clearly struggle with staying in the workforce until their retirement age,” says Nivalainen.
Women are better at predicting their actual retirement age than men are. About 60% of the women who planned to continue working past their 63rd birthday went through with their plans. Only slightly more than 50% of the men did the same.
The study also shows that high-earnings women less often intend to stay on at work beyond 63 and typically retire at that age.
Wealthier men often retire early while indebted men tend to work longer.
Riester pensions in Germany
Supplementary pensions increasingly make up for reduced statutory pensions in Germany. Riester pensions were introduced in 2002.
The aim of Riester pensions is to help low-income people earn a sufficient pension level since statutory pensions have become increasingly less generous.
Nearly 54 million people were insured for earnings-related pensions in Germany in 2016.
Riester pensions have been criticised for being too expensive and complex. Low-income people, whom the pension was intended for, cannot afford to pay the contributions. Less than half of those who earn less than €1,500/month have an occupational pension or an individual Riester pension.
It remains to be seen what role statutory and supplementary pensions will take in Germany in the future.
Swedish Pension Scam
Premiun pensions are part of the largest web of white-collar crime in Swedish history. So far, two premium pension funds are suspected of having defrauded pension savers of more than 100 million euros. At least three other funds are under investigation.
The untangling of the web began in 2015 as Falcon Funds performed poorly but gained massive amounts of new customers. It turned out that, among other things, the Fund’s telemarketers tricked customers to surrender their codes to the premium pension service and then transferred assets, without the customers’ knowledge, to Falcon Funds.
Taking into account the massive scale of this scam, it is surprising that the Swedes’ trust in the pension system has not suffered. A reform of premium pension acts, set to come into effect in July 2018, has probably contributed to this. Thanks to the reform, the authorities will get more resources and power to supervise premium pensions. The number of funds will also be cut from 800 to 300.